A "desperate" attempt to turn a typo into a second chance, says Newegg's Lee Cheng.

Earlier this year, online retailer Newegg knocked out a software patent that would reach the heights of infamy only after its death—a patent claiming to own the idea of an online "shopping cart." Soverain Software had used that patent (and a few others) to score untold tens of millions in royalty payments. Its fully fleshed-out website is an empty husk, with phone numbers and e-mail addresses that do nothing. At trial, the company admitted to never having made a sale. Soverain is a group of lawyers who hold a batch of patents.

Newegg's victory over Soverain was total; the patents wiped out were key to the troll's success. Soverain, which was expecting more big payments after defeating Avon and Victoria's Secret at trial, was now going to come up empty. "Now, nobody has to pay Soverain jack squat for these patents," Newegg Chief Legal Officer Lee Cheng told Ars after the January ruling.

But Soverain actually had one final trick up its sleeve—a desperate attempt to pull victory from the jaws of defeat that was, in Cheng's telling, effectively based on a typographical error. The appeals court had invalidated claim 34 of the "shopping cart" patent, not claim 35. Instead of allowing what Newegg said was a mistake to be corrected, Soverain tried to literally make a federal case out of it. The patent company asked for a re-hearing from the panel, as well as from the full "en banc" court, saying that after months and months of arguing with Newegg over the value and validity of claim 34, it was actually claim 35 that should have been considered all along.

This was a desperate, desperate ploy by Soverain, because we basically wiped out their franchise," said Cheng, now that the last-ditch effort is finally dead. "They were expecting God knows how many hundreds of millions of dollars over time."

Asked this week whether Soverain might continue its fight, Cheng himself appealed to an even higher power than the courts. "Please God, let Soverain file a petition for cert to the Supreme Court," said Cheng. "That would be so funny. Please make my day."

Looking for a big break in small differences

To understand Soverain's claims, a brief description of how patent claims work is helpful. Patent claims are either "independent" and stand on their own, or they are "dependent" and connected to another claim.

In the shopping cart patent, the key claim is claim 34, which describes the operation of a shopping cart. It says, in part:

at least one buyer computer for operation by a user desiring to buy products;
at least one shopping cart computer; and
a shopping cart database connected to said shopping cart computer;
said buyer computer and said shopping cart computer being interconnected by a computer network;

And goes on to describe other elements that would be needed. Claims 35-38 describe various incarnations of a shopping cart, with other small additions. As the litigation went ahead, Soverain, like any patent holder, was forced to narrow which specific claims it was going to use against Newegg. It settled on claim 35.

However, when it came to validity, much of the actual argument involved the lawyers discussing and arguing about claim 34—after all, that contained most of the description of the "invention." When Newegg's lawyers sought to show that this was all old news—as it eventually did, using CompuServe's online mall as "prior art"—it referenced claim 34. Newegg sought to shoot down claim 34, with the understanding that the success or failure of claim 35 was going to rise or fall with claim 34. The only thing that claim 35 added is a difference in when a "payment message," such as a receipt or invoice, gets created.

Importantly, Soverain's lawyers never contested that argument, and simply engaged with Newegg over claim 34. That continued—until they suffered a stunning loss. A few days after the ruling came out, Newegg sent a letter asking for the panel to correct "claim 34" to read "claim 35." Soverain, realizing that the discrepancy could be one more piece of ammo in its final effort to maintain its trolling empire, wrote its own letter to the court asserting that claim 35 had a "material" difference and asked to fully brief the issue.

The court allowed the additional briefing, in a terse March order, sounding somewhat annoyed. The district court and parties had talked about claim 34; the trial proceedings and record both referred to claim 34; both Newegg and Soverain had talked about claim 34 on appeal; and yet the jury form did indeed read claim 35, and Soverain was now saying the difference was crucial.

Hoping his next foe has the “balls” to go to trial

Newegg Chief Legal Officer Lee Cheng

Newegg

In June, Soverain filed its 30-page brief arguing about the major differences between claim 34 and claim 35. Newegg responded, noting that until Soverain lost, it had never once claimed the differences between claims 34 and 35 were meaningful in any way.

The three-judge panel considered the arguments and now has issued its final order, agreeing—again—with Newegg. Soverain managed to drag out seven more months of litigation, with nothing new to show.

"On this rehearing, Soverain has not provided any new information concerning the specific limitation of claim 35," stated the appeals panel. "The supplemental briefing reinforces the absence of dispute that the element in claim 35 is in the CompuServe Mall prior art."

The panel also forwarded Soverain's request for an en banc rehearing to the full court; that was denied as well. Soverain's final attempt was shut down.

"This isn't a very substantial ruling," said Cheng. "This was just a Hail Mary on Soverain's part, because they wanted to revive their business so desperately."

Cheng's only regret is that he has only one scheduled patent trial to look forward to, against a controversial patent-holder called TQP Development, which claims an Internet-spanning patent on SSL, the widely used encryption protocol. Newegg is currently scheduled to clash with TQP in November.

"I hope they don't wuss out on this case," said Cheng. "I hope they have the balls to try it. I am not optimistic that they will, because it would be a big mistake on their part to let this case go to trial."

Cheng's only regret is that he has only one scheduled patent trial to look forward to, against a controversial patent-holder called TQP Development, which claims an Internet-spanning patent on SSL, the widely-used encryption protocol.

Ummm, yeah, don't bother holding your breath on that one. We broke and invalidated SSL some time ago. We forgot to mention that earlier, sorry.

Heck I wrote and ran an online Shopping Cart 'door' back in Fidonet days. It was not innovative then, just something that needed to be done if you wanted to sell stuff. In hindsight i could have patented it and stopped that troll before it started :-(

Might even still have the thing lying around on a backup somewhere if i could dig it up and find the hardware to restore it...

Incidentally - my recent laptop purchase for my kid for school was from Newegg specifically because of their stance on patent trolling.

It's difficult to take this author seriously when right out the gate this obviously wrong statement is made: "a patent claiming to own the idea of an online "shopping cart.""

"Ideas" cannot be patented.

If Joe is indeed a patent lawyer he, more so than the lay person, should know that patents are not issued for "ideas", they are only issued for implementations of ideas.

Joe may want to consider rewording that opening paragraph.

Certain patent holders certainly attempt to enforce their patents as covering ideas, however. Maybe that isn't the patent's fault, but the criticism of the choice of language as not strictly following the legal definitions seems minor, as opposed to efficiently conveying the essence of the situation to the average non-attorney reader.

"This was a desperate, desperate ploy by Soverain, because we basically wiped out their franchise," said Cheng, now that the last-ditch effort is finally dead. "They were expecting God knows how many hundreds of millions of dollars over time."

Asked this week whether Soverain might continue its fight, Cheng himself appealed to an even higher power than the courts. "Please God, let Soverain file a petition for cert to the Supreme Court," said Cheng. "That would be so funny. Please make my day."

I fucking love this guy. Why can't every head lawyer of every company be like this? I'm sick of these huge multi-billion dollar companies just rolling over to these patent trolling fucks just because some MBA tells them it's cheaper. I want these NPEs to get fucking pounded into nothing.

LOVE the Newegg lawyer. He has the right attitude instead of suggesting settlement and just making it a business expense. And shame on all the lawyers who advised other clients to settle with these clowns.

It's difficult to take this author seriously when right out the gate this obviously wrong statement is made: "a patent claiming to own the idea of an online "shopping cart.""

"Ideas" cannot be patented.

If Joe is indeed a patent lawyer he, more so than the lay person, should know that patents are not issued for "ideas", they are only issued for implementations of ideas.

Joe may want to consider rewording that opening paragraph.

Certain patent holders certainly attempt to enforce their patents as covering ideas, however. Maybe that isn't the patent's fault, but the criticism of the choice of language as not strictly following the legal definitions seems minor, as opposed to efficiently conveying the essence of the situation to the average non-attorney reader.

It's inaccurate and it portrays patent holders as unscrupulous and the patent system as unfair. Both simplistic and foolish portrayals better suited to click-bait sites like "Business Insider".

Except patent holders are unscrupulous and the patent system is unfair.

This has been demonstrated time and time and time again.

Genuine examples of the mythology used to justify the patent system seems entirely absent.

"This was a desperate, desperate ploy by Soverain, because we basically wiped out their franchise," said Cheng, now that the last-ditch effort is finally dead. "They were expecting God knows how many hundreds of millions of dollars over time."

Asked this week whether Soverain might continue its fight, Cheng himself appealed to an even higher power than the courts. "Please God, let Soverain file a petition for cert to the Supreme Court," said Cheng. "That would be so funny. Please make my day."

I fucking love this guy. Why can't every head lawyer of every company be like this? I'm sick of these huge multi-billion dollar companies just rolling over to these patent trolling fucks just because some MBA tells them it's cheaper. I want these NPEs to get fucking pounded into nothing.

I do like his attitude.

When I read one of his quotes, I just get a mental image of Newegg getting a patent licensing letter (or whatever patent-holders send out) and him getting a huge, shit-eating, Cheshire-cat grin. Kinda like the one a dog gets right before it snarfs up a treat.

It's difficult to take this author seriously when right out the gate this obviously wrong statement is made: "a patent claiming to own the idea of an online "shopping cart.""

"Ideas" cannot be patented.

If Joe is indeed a patent lawyer he, more so than the lay person, should know that patents are not issued for "ideas", they are only issued for implementations of ideas.

Joe may want to consider rewording that opening paragraph.

Certain patent holders certainly attempt to enforce their patents as covering ideas, however. Maybe that isn't the patent's fault, but the criticism of the choice of language as not strictly following the legal definitions seems minor, as opposed to efficiently conveying the essence of the situation to the average non-attorney reader.

It's inaccurate and it portrays patent holders as unscrupulous and the patent system as unfair. Both simplistic and foolish portrayals better suited to click-bait sites like "Business Insider".

Not every situation is comprised of two equally supportable sides. Sometimes reality is that people behave badly and systems are flawed. That is exactly the scenario here. Ars has accurately portrayed the situation and the people involved.

This is what gets me. Our country bills itself as the "land of opportunity", where any little guy with a service/product and some ambition can post up a sign and go into business. But, how can little guys start a business when there's extortionists rolling around looking for an easy mark?

Newegg had the $ to fight this, but look at who already rolled over ... Victoria's Secret ... Avon. Those are not small companies. How is a little guy supposed to fight this? The little guy can go broke just hiring a lawyer to see if the claim is legit.

"This was a desperate, desperate ploy by Soverain, because we basically wiped out their franchise," said Cheng, now that the last-ditch effort is finally dead. "They were expecting God knows how many hundreds of millions of dollars over time."

Asked this week whether Soverain might continue its fight, Cheng himself appealed to an even higher power than the courts. "Please God, let Soverain file a petition for cert to the Supreme Court," said Cheng. "That would be so funny. Please make my day."

I fucking love this guy. Why can't every head lawyer of every company be like this? I'm sick of these huge multi-billion dollar companies just rolling over to these patent trolling fucks just because some MBA tells them it's cheaper. I want these NPEs to get fucking pounded into nothing.

I do like his attitude.

When I read one of his quotes, I just get a mental image of Newegg getting a patent licensing letter (or whatever patent-holders send out) and him getting a huge, shit-eating, Cheshire-cat grin. Kinda like the one a dog gets right before it snarfs up a treat.

Did you read the part where they never made a single sale through said "shopping cart"?

The name of this site is "Ars Technica", not the National Enquirer. Accuracy counts (or should count) for something.

Except that in this case the patent really was for an idea, essentially. That idea could have been the basis for a more specific implementation, but it actually failed to properly represent a single, particular implementation of a product. You might call it a method, but that would be misleading: it generally shouldn't pass the bar for a method in patent terminology.

But the patent office, in their infinite wisdom, allowed the words "computer system" (let's leave mobile out of this for now) to be attached to pretty much anything as being essentially a concrete enough "implementation" to be patented as such or as a system to fulfill the method requirements. Which is as ridiculous as saying it "gets run through a machine" (and not specifying further) would be for a manufacturing method patent.

Even if you think software patents (which are largely just glorified ideas with the words "computer system" thrown in somewhere) should be patentable, the patent office has so thoroughly messed up on such a wide scale in terms of narrowing such patents down to specific implementations that it HAS reached a point where arguing that all software patents should be denied is in fact a reasonable argument.

This would be as bad as allowing a patent for the idea that one might type out a receipt instead of writing it by hand, which simply detailed that, yes, you will need some sort of device to type it on paper with, and a customer to be present (a second claim for over the phone, another for by mail, etc), and a clerk to do the typing on the typographic device, and paper, and some form of ink in the device to make an impression on the paper... we're still really just talking about an idea, which had some of the surroundings detailed as a red herring to seem like something more substantial was there. This happens ALL the time with software patents.